Sri Mulyani Proposes Reimbursement Of SBN Revenue 10 Years To 6.28 Percent In 2021

Minister of Finance, Sri Mulyani. (Photo: DPR)

JAKARTA - Minister of Finance Sri Mulyani Indrawati has proposed to replace the 10-year tenor Government Securities yield assumption, which is used as a substitute for the assumption for the State Treasury Bills (SPN).

Sri Mulyani said that in the macroeconomic framework and the principles of fiscal policy 2021 (KEM-PPKF 2021), the government wrote the 10-year SBN as a basic macroeconomic assumption with an interest rate of 6.67 percent to 9.56 percent. However, he considered, that figure had to be changed because it was not in accordance with the current situation.

Ani, his nickname, said the government is proposing to change it to 6.29 percent to 8.29 percent in the assumption next year. This change is based on global and national economic developments in recent times. Economic pressure has begun to decline, so there needs to be a more appropriate target adjustment.

"At the beginning, the situation in March-April was still highly volatile. Meanwhile, currently, the yield of 10-year SBN has fallen to nearly 7 percent. In today's discussion, we suggest to Commission XI that the projected range is lowered from 6.29 to 8.29 percent," he said, in the work meeting of Commission XI DPR RI, Monday, June 22.

Ani said that the 10-year SBN will be issued by the government regularly as a benchmark series with a portion reaching 25 percent to 30 percent. 4.99 percent of which came from domestic outstanding.

In this working meeting, Sri Mulyani also offered the option to change the 3-month SPN with the 5-year SBN, which is considered to reflect more short-term market risks. On the 5-year SBN, the interest rate is projected at 5.88 percent to 7.88 percent.

According to the plan, the issuance of SBN with a tenor of 5 years will be carried out with a portion of 20 percent to 30 percent of the total issuance. With domestic outstanding, it is estimated to be in the range of 5.94 percent.

"These two securities greatly affect the posture of interest rate spending because they explain nearly 5 to 5.9 percent or more than 10 percent of our total domestic outstanding," he said.